Gold Price Analysis: Yellow metal teases pennant breakout

• Gold bulls look to penetrate the upper end of the pennant pattern. 
• A breakout, if confirmed, would allow a re-test of highs seen in April. 

Gold is currently hovering near $1,1718, which is the upper end of the one-month-long contracting triangle, popularly known as pennant pattern. 

Acceptance above that level would confirm a pennant breakout. That would imply a continuation of the rally from the March 20 low of $1,455 and open the doors to a re-test of the April 14 high of $1,747. On the way higher, the lower high of $1,739 created on April 23 could offer some resistance. 

Alternatively, a downside break of the pennant pattern would confirm a bullish-to-bearish trend change and expose the 50-day average at $1,651. A violation there would shift the focus to $1,614 (100-day average) and $1,600.

The bullish scenario looks likely, as the 14-day relative strength index has broken out of a four-week-long falling channel. 

Daily chart

Trend: Bullish

Technical levels